Arab GDP to Reach $4 Trillion in 2026 as Inflation Eases

Inflation cooled and unemployment eased across Arab markets in 2025, and the region’s output is now projected to reach around $4 trillion in 2026, according to the Arab Investment and Export Credit Guarantee Corporation (Dhaman).

Dhaman said Arab GDP increased by 1.7% to roughly $3.8 trillion in 2025. For 2026, GDP is expected to rise 5.6% to about $4 trillion, supported by growth in 19 Arab countries, including eight oil economies that together account for more than 70% of regional output. Economic weight remains concentrated, with Saudi Arabia, the UAE, Egypt, Algeria and Iraq making up nearly 73% of total Arab GDP. The outlook is underpinned by expectations of easing regional unrest, improving economic conditions, and gains from structural reforms and merchandise and service exports.

Consumer price inflation fell to around 10.3% in 2025 and is projected at 8.1% in 2026. The average unemployment rate eased to 9.4% in 2025 and is expected at 9.2% in 2026. The value of Arab GDP in purchasing power terms rose 6.1% to exceed $9.8 trillion in 2025 and is expected to surpass $10 trillion in 2026; GDP per capita edged down 0.3% to $7,806, while on a purchasing power basis it rose 4% to above $20,000.

Investment across 14 Arab countries rose 5.2% to about $864 billion in 2025, with a further 5.4% increase to more than $910 billion forecast for 2026. Government budgets posted a combined deficit of nearly $95 billion in 2025—around 2.5% of regional GDP—amid a 13% slide in average global oil prices to $69 per barrel. The deficit is expected to narrow slightly next year.

External balances and debt indicators also softened. The current account surplus dropped 47% to $63 billion in 2025 and is projected to fall to $41.5 billion in 2026. Government debt-to-GDP climbed to 46.2% in 2025, with another increase anticipated in 2026, while external debt reached about 54.6% of GDP.

Foreign exchange reserves grew 3.4% to roughly $1.2 trillion, covering around 5.6 months of imports in 2025, with modest gains expected next year. Currency movements varied across the region: seven Arab currencies strengthened against the US dollar, six remained stable, and seven weakened.